As digital currencies like bitcoin continue to captivate investors and the world’s largest corporations, the Bank of England announced Monday that it will set up a joint task force with the U.K. Treasury to explore the potential issuance of its own central bank digital currency (CBDC).
Central bank digital currencies use much of the same technology that underpins popular cryptocurrencies like bitcoin, but they are controlled by one central player rather than a decentralized group of users.
That means they aren’t subject to the wild price swings common in the decentralized cryptocurrency market: Bitcoin lost $300 billion in market value last weekend alone.
Proponents of central bank digital currencies say they have the potential to make payments faster, cheaper and more secure when compared with days-long settlement processes at banks.
The Bank of England said it has “not yet made a decision” about whether to issue a digital currency in the United Kingdom and plans to explore the “benefits, risks and practicalities of doing so.”
“A CBDC would be a new form of digital money issued by the Bank of England and for use by households and businesses,” the Bank of England said in a statement Monday. “It would exist alongside cash and bank deposits, rather than replacing them.”
The United Kingdom is only the latest country to join a global push to develop a viable central bank digital currency. Federal Reserve chair Jerome Powell said earlier this year that the United States is “looking carefully, very carefully, at the question of whether we should issue a digital dollar.” Last month, European Central Bank President Christine Lagarde said the ECB could launch a digital currency within four years if the institution decides to proceed with the project, according to Bloomberg. China is also investing heavily in government digital currency, and could be ready to test that currency at the 2022 Winter Olympics in Beijing, CNBC reported.
Fed Chair Powell Says Digital Dollar Is A ‘High Priority Project’ (Forbes)
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